Stocks rebound with oil while Treasuries retreat

Stocks rallied, with benchmark indexes rebounding from the worst losses of the year, as more companies posted improving earnings and Dell Inc. agreed to the largest leveraged buyout since the financial crisis. Italian notes rose and oil gained; the yen weakened and Treasuries slid.

The Standard & Poor’s 500 Index climbed 1.2% at 3:30 p.m. in New York, posting its biggest gain in a month and returning to above its highest closing level since December 2007. Ten-year U.S. note yields jumped five basis points to 2.01%. The yen declined at least 0.6% against its 16 major peers after Bank of Japan Governor Masaaki Shirakawa said he would step down next month. Oil rose following its biggest loss in two months.

Stocks jumped after slumping yesterday on renewed concern Europe’s debt crisis will intensify. Companies from Computer Sciences Corp. and Estee Lauder Cos. in the U.S. to Munich Re and ARM Holdings Plc in Europe posted results that beat estimates. Data today showed service industries shrank less than initially estimated in Europe while growing more than economists forecast in the U.S.

“It’s looking like we’re getting into a ‘buy on dips’ mentality as people try to increase their positioning,” Rex Macey, who oversees $20 billion as chief investment officer at Wilmington Trust Advisors in Atlanta, said in a telephone interview. “People have thought, ‘Gee, I need to be in the market.’ But they’ve been waiting for a buying opportunity and now they may be getting nervous that may not materialize and some money’s flowing.”

Market Movers

The S&P 500 has rallied 6.1% in 2013 as U.S. lawmakers reached a budget compromise and companies reported better-than-estimated earnings. The gauge is less than 4% below the record 1,565.15 it reached in October 2007. The Dow Jones Industrial Average is about 1% from its all-time high.

The S&P 500 erased yesterday’s 1.2% drop, its biggest since Nov. 14. Computer Sciences rallied 10% for the biggest gain in the S&P 500 after also increasing its 2013 forecast and saying “our turnaround is tracking to plan.” Estee Lauder jumped 6.4% after the maker of Mac cosmetics and Clinique skin products topped the average estimate for adjusted earnings by 10% and lifted its profit forecast for the year.